The great Facebook cashout now has a date: November 1. Former and current employees recently received an email from Facebook's stock administrator updating them on plans to let employees sell some of their shares, even though the company is still private. Details of the plan are expected in mid-October; one ex-employee characterized it as a "buyback." That suggests that the company itself is going to buy shares from employees, and then sell them to an outside buyer. The limits previously outlined by CEO Mark Zuckerberg in an email to employees — 20 percent of an employee's vested shares, or $900,000, whichever is less — remain unchanged. The plan has an advantage over letting employees make ad hoc sales to wealthy investors, in that Facebook gets to choose who it has a shareholder. One thing's not clear: How will Facebook force employees, especially ex-employees, to stick with the plan?Facebook's corporate charter has a relatively unusual provision for employee stock sales. The company has a right of first refusal over employees' shares, meaning that it has the right to match any price offered by a buyer; most companies have tighter restrictions. Employees have been told that sales outside the program will have "career-limiting effects"; promotions, raises, and new stock-option grants may be taken away from those who sell anyway. But Facebook has no such hold on ex-employees. And the offers in the market are tempting. Facebook's program will let shareholders sell at $8.90 a share, which represents a company valuation of $4 billion; some buyers are offering $11 a share. If too many transactions go through at the higher price, Facebook may have to revalue its shares, which will have untoward tax implications for the company and other employees. It's not clear what Facebook can do, short of rewriting its corporate bylaws. But the company program does have one thing going for it: It will be formal, organized, and predictable. For geeks who'd rather optimize code than their own financial returns, letting their managers handle their money may seem easier.
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